With Nvidia at all-time highs at nearly $1,000 a share, 5 more stocks are making inroads and poised to capitalize on the growth trajectory of the AI chip market.
There are 5 stocks strongly correlated with Nvidia up to 98%, ready to benefit from the potential of artificial intelligence thanks to their direct link with the technological giant of advanced graphics chips.
Since the unveiling of ChatGPT, demand for AI accelerators for training and inference for generative AI has increased exponentially, benefiting Nvidia, which has a full suite of products for this scope.
The boom in Nvidia shares has piqued the attention of investors, with an impressive rise of 295% in 12 months supported by a meteoric growth of its chips intended for artificial intelligence applications. However, Nvidia’s rise is not alone: other technology companies are racing to grab market share in the AI sector and are buying its chips.
These companies have proven highly correlated with Nvidia, with stock movements tending to follow those of the chip giant up to 98% of the time. Let’s see in detail which stocks these are and why they have good growth prospects.
1. Microsoft
Microsoft takes the top spot on this list as it is Nvidia’s largest AI chip customer. The company is making massive investments in these chips, recognizing their strategic value for its research and development activities in the field of artificial intelligence.
Microsoft’s notable commitment to the artificial intelligence ecosystem should be highlighted, with billion-dollar investments in companies such as OpenAI, producer of ChatGPT, whose technology has been integrated into a vast range of the company’s products. This strategy has given Microsoft a significant competitive advantage in the race to commercialize AI-based software. A tangible example of this commitment is Maia, an innovative chip introduced by the company in November, specifically designed to run large language models and support AI-based computing.
2. Meta Platforms
Meta Platforms, formerly known as Facebook, announced that it plans to purchase approximately 350,000 high-end H100 graphics processing units from Nvidia to provide the computing power needed to pursue its goals in a new area of artificial intelligence. This commitment reflects the company’s long-term vision in AI and has contributed to the growing correlation between Meta’s shares and those of Nvidia.
According to estimates by Raymond James analysts, “Nvidia sells the H100 at a price between 25,000 and 30,000 dollars, while on eBay they can reach up to 40,000 dollars. While Meta will certainly get benefits for bulk purchases, it is still likely to spend over $9 billion on GPUs.”
Recently, Zuckerberg revealed that Meta GPUs have already been successfully used in training Llama 3, an open-source alternative to OpenAI’s ChatGPT models. However, the approach taken by the company is different than its rival, as it plans to open-source the Llama 3 model, just as it did with its predecessor, the Llama 2.
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3) Super Micro
Super Micro, which specializes in producing high-performance server and storage solutions for complex computing tasks, has benefited from the integration of Nvidia’s artificial intelligence chips into its products. This collaboration has catalyzed a significant increase in the value of Super Micro’s shares, which have increased by more than 1,000% in the last year.
In the second quarter, revenues increased by 103%, thus exceeding the company’s entire annual revenue in 2021, standing at $3.66 billion. Forecasts for the fiscal third quarter, which ends in March, indicate revenues of $3.7 billion to $4.1 billion, with estimated growth of 204%. For the full fiscal year 2024, Super Micro revised its revenue forecast upward to a range of $14.3 billion to $14.7 billion, marking a 103% increase.
Super Micro CEO Liang highlighted that demand exceeds supply and pointed out that with more inventory available, the company could meet even higher demand. Super Micro said it maintains close relationships with most Silicon Valley semiconductor companies, including Nvidia, and can deliver its servers with new chips faster than competing server makers.
4) Tokyo Electron Device
In Japan, Tokyo Electron Device stands out as the main distributor of Nvidia chips and is benefiting from the favorable trend of the artificial intelligence market in the country. This partnership has led to a significant increase in the value of the company’s shares, with an increase of more than 180% in the last year.
Tokyo Electron is the leading manufacturer of semiconductor equipment in Japan and ranks fourth in the world in terms of sales. Analysts expect Tokyo Electron to generate net profit of about 430 billion yen in the fiscal year ending March 2025 and about 560 billion yen the following year, with both estimates representing an increase in 10% compared to the beginning of the year. Despite this, it is believed that there is still considerable scope for further gains.
The AI server sector is recognized as a significant source of growth for Tokyo Electron, supported by investments in advanced DRAM memories and an increase in extraordinary equipment investments by foundries. The company has also developed innovative technology to improve the performance of 3D NAND flash memory, opening up new revenue opportunities.
5) Mitsui
Japanese conglomerate Mitsui is making significant investments in building Tokyo-1, a supercomputer developed in collaboration with Nvidia, aimed at boosting artificial intelligence in the pharmaceutical sector. This ambitious project launched last year has raised the value of Mitsui’s shares by 60% in the last 12 months, highlighting investors’ enthusiasm for the company’s innovative prospects.
Founded way back in 1876, Mitsui Corporation is a conglomerate operating globally across various industries, including trade, investment, and services, with a particular focus on energy, infrastructure, chemicals, and finance. Recognized for its strategic partnerships and commitment to sustainable business practices, Mitsui stands out as a resilient and future-oriented business. Mitsui stock currently trades at a P/E ratio of 10.46, lower than the industry average of 16.32, providing investors with a value opportunity.
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Original article published on Money.it Italy 2024-04-05 15:42:36. Original title: 5 azioni correlate con Nvidia fino al 98% (e pronte a un nuovo rally)
